Viewpoints: Letters / Opinions
My Support for Ballot Measure 1
The Fair Share Act
By Senator Bill Wielechowski
October 04, 2020
In a past newsletter I told you about my full support of Ballot Measure 1, the Fair Share Act. I want to reinforce now how important passing Ballot Measure 1 is to the future of Alaska.
Today the Legislature's nonpartisan Finance Director testified in a legislative hearing that the state's current budget will be unsustainable beginning in just the next fiscal year. The state is out of savings to dip into, and the current budget is already one by which Alaskans have seen and experienced drastic cuts in the last few years. We felt deep cuts to state programs and services we need and value, such as funding for preschool and K-12 education, public safety, the University, the Alaska Marine Highway System, Medicaid, maintenance, and capital projects--and of course, your PFD, which was only $992 this year, but under the statutory formula should have been about $3,000. Even at these reduced funding levels, the state will see a $903 million deficit next year.
The Legislative Finance Director warned that in light of these dire fiscal circumstances, the Legislature must consider revenue measures.
Most of you know how staunchly I defend your right to your PFD. Without new revenue, I'm afraid that when the Legislature convenes to address next year's budget, the PFD will be the first thing to go completely. I will fight hard to prevent that but many in the Legislature do not agree with my views on preserving the PFD. Beyond the PFD, the Legislature would still have to consider additional dramatic cuts to state programs, probably eliminating wholesale many of them .
It's no coincidence that when the oil industry lobbied the Governor and Legislature in 2013 for Senate Bill 21 (SB 21) to change the state's previous oil tax structure to their own benefit, and got it passed--we almost immediately began to experience our fiscal problems, including cuts to the PFD. SB 21 implemented a tax system that established historically low oil tax revenue for Alaska.
You may have seen signs opposing Ballot Measure 1 claiming that voting against it will save the PFD and jobs for Alaskans. These statements are easy to refute.
The oil companies have supported cutting your PFD ever since the 1999 Advisory Vote by Alaskans on whether to use the Permanent Fund to pay for government services. Back then, the oil companies were the top contributors on the "Yes" effort to use the People's Fund because they didn't want to be taxed. The people spoke up resoundingly then at 83%, telling lawmakers to find another way to pay for government. And ever since the oil industry got what it wanted in SB 21, you've lost nearly $7,000 to PFD cuts because we do not have enough revenue.
And the oil industry promised Alaskans more jobs, more revenue, more investment, and a growing PFD if we voted to keep their huge tax cuts during the SB 21 Repeal vote in 2014. Four weeks after that election, BP laid off 475 Alaskans, and the oil industry has since cut another 5,000 jobs-all while the percentage of nonresident workers has increased. Investment at Prudhoe Bay dropped from $826 million per year to $202 million. Within the first six months of the new tax law, state revenue dropped $1.6 billion-even though the price of oil remained the same. In fact, under SB 21 we've actually seen a NEGATIVE oil production tax rate these last five years when factoring in oil tax credits. And the PFD has been slashed while ConocoPhillips has dramatically increased dividends to shareholders.
Ballot Measure 1 is a citizens' initiative that would increase Alaska's share of revenues from the production of our own oil. It would only increase taxes on three North Slope fields--which are some of the industry's most profitable fields in the world, and will continue to be even once the Fair Share Act passes. Ballot Measure 1 increases the gross minimum production tax for these three fields from 4% to 10%, and it eliminates a tax credit for major producers which has lost the state over $4.2 billion since their creation under SB 21 just six year ago.
Groups opposing Ballot Measure 1 have raised over $17 million so far--which has mostly come from huge donations from ConocoPhillips, ExxonMobil, and Hilcorp, the majorly profitable producers who would see their taxes raised. It's obvious why they would put so much money to stop Alaskans from voting "Yes" on Ballot Measure 1--an investment of $17 million against the Fair Share Act could mean they get to keep $1.1 billion instead of paying it to Alaska.
In the coming days and weeks you'll hear from industry supporters that oil taxes are too complex for the people to decide and it should be done by the Legislature. They misrepresent the truth--the Legislature has refused to take up oil taxes since SB 21, which is why the citizens need to do it now. I have filed multiple bills each year since 2013 to try to get the state its ownership share of the our oil wealth. Those in positions of power have prevented me from receiving even one bill hearing.
With our savings gone and huge deficits, Alaska cannot afford to simply give away our resources like the current tax regime does. I'm not willing to consider other revenue measures like a sales tax or personal income tax until we fix our abysmally broken oil tax system. This is our oil, we deserve our share.
Have questions about the Fair Share Act? I'm happy to talk with you.
Senator Bill Wielechowski
About: Sen. Bill Wielechowski represents Muldoon, Russian Jack, JBER, Reflection Lake, University Area, College Gate, Nunaka Valley, and Wonder Park.
The text of this letter was NOT edited by the SitNews Editor.
Received October 02, 2020
- Published October 04, 2020
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